The Hedgehog (Hh) family of secreted proteins controls many key developmental processes in species ranging from Drosophila to human. Deregulation of Hh signaling activity has been implicated in numerous human disorders including cancer. Hh exerts its biological influence through a conserved but poorly understood signaling cascade. Drosophila has been a powerful model organism to identify new pathway components and uncover novel mechanisms that regulate Hh as well as other signaling pathways in animal development because sophisticated genetic, molecular and biochemical tools are available to dissect the pathways in the whole animal as well as in cultured cells. The long-term goal of my laboratory is to understand how the Hh signal is transduced inside the cell to control cell growth and patterning. Although many components in the Hh pathway have been identified, how the Hh signal is transduced across the cell membrane and how different levels of the Hh signal are translated into distinct cellular and developmental outcomes remain poorly understood despite two decades of intensive investigation. The seven- transmembrane GPCR-like protein Smoothened (Smo) is the obligatory and conserved Hh signal transducer. In the past, we discovered that Smo activity is not only controlled by its subcellular localization and abundance but also by a conformational switch, and that Smo intracellular trafficking and conformation are regulated by covalent modifications including phosphorylation and ubiquitination as well as by interacting proteins. Furthermore, we extended our findings in Drosophila to the mammalian systems by demonstrating that the activity of mammalian Smo is regulated by a phosphorylation-driven conformational change similar to its Drosophila counterpart. In this proposal, we will investigate the molecular mechanisms that control Smo intracellular trafficking and abundance by characterizing a family of E3 ubiquitin ligases that catalyze Smo ubiquitination (Aim1). We find that Smo undergoes a new modification that regulates its trafficking and abundance by antagonizing ubiquitination. We will explore the underlying mechanism by which this new modification regulates Smo trafficking (Aim 2). Finally, we will investigate the function and regulation of Smo phosphorylation by a membrane-associated kinase (Aim 3). The proposed study should provide deeper understanding of the Hh signal transduction mechanism and shed new light on how graded Hh signals are translated into different developmental outcomes. As abnormal elevation of Smo activity and Hh signaling contributes to many human cancers and Smo is a primary therapeutic target for drug development, our study will provide new avenues for improving diagnosis and therapeutics of cancers caused by abnormal Hh signaling.